Student Loans : News, Updates and Blog Posts

Time to start a new year! To do our part to help, we wanted to let you know about a couple of new resources for those of you returning to college this month. The first is a free downloadable ebook: How To Find Cheap College Textbooks, available online at http://www.campusx.com/college-textbooks/. The second is a new student credit card offer we have secured exclusively through CitiBank: The Citi® Dividend Platinum Select® Card for College Students and available only at www.StudentPlatinum.com.  This offer includes: “Promotional 10% cash back reward program; no annual fee; and a 0% introductory rate for all transactions”!

For up to date on new and improved resources for students looking for ways to pay for college, visit: http://www.studentloannetwork.com/resources/

Do you have ideas for new products, services or ebooks? Send us your ideas in the comments below.

I recently conduced a survey to find out if students knew they could choose their own lender for their Stafford loan when attending a FFELP school.  The results I got back were quite alarming.  Only 34% of students got the answer correct and I even provided a helpful link which makes me wonder if that number may have been even lower otherwise.

I guess my earlier lesson bears repeating.  You may select the lender of YOUR CHOICE when it comes to Federal loans at FFELP schools (provided your lender disburses federal loans of course).  The school will be held liable and subject to fines and other sanctions if they  block you or do not certify your loan.

Flex some muscle.  Don’t let the FAO tell you otherwise.

That is the million dollar question, and I mean that literally not figuratively these days. Education costs have soared in recent years at a rate far greater than inflation. And with the U.S. population continuing to grow more students are seeking higher education. As a result Universities reap the financial benefits. The demand is high and the supply (number of seats) is low.

I’ve been having the great college debate with my buddy Brian, 33 years old, who recently went back to school. He thought a Bachelors degree from a premier school would unlock the door to a fat salary, but so far that has not been the case. In fact, in a well-known paper by Princeton economist Alan Kruegar and researcher Stacy Berg Dale at the Andrew W. Mellon Foundation they discovered the school itself did not translate to a higher salary.

It was discovered that salaries from students accepted to a top-tier school but electing to attend a less selective/more affordable institution, were similar. Bottom line, if you’re bright you’re bright and the cream will always rise to the top. Brian, for a smart guy, made a dumb decision and now has astronomical student loan bills from his “name school.”

Still, some will argue the name school attracts the most distinguished professors, and that your education is second to none. Also, the contacts you make during your college career can play a pivotal role in where you land in your professional career. At upper echelon schools you tend to rub elbows with dignitaries, royalty, and future industry leaders. So much of life is who you know and not what you know sadly.

Implicit benefits aside the price tag is still staggering for both students and parents even with scholarships and grants. It is a vicious circle. If you don’t go to school you have little chance of landing that high paying job, and if you go to school you may face so much student loan debt you default on your loans.

Another friend of mine entering his senior year at Boston College will graduate in May with just over $100,000 in student loans (both private and federal). He’s already reserved to the fact that he’ll either be living with Mom and Dad for the next several years or won’t be able to buy a house until he’s 40.

With a bachelor’s degree serving as this generations High School diploma it has certainly put students and parents in a precarious position. When my Dad reminisces of yesteryear he speaks of simpler times when everyone had a shot at the American dream. Today the American dream has turned into an unattainable nightmare for so many. Something needs to change.

FICO comes from the Fair Isaac Company, which came up with the process of condensing all of your credit information into one three-digit number.

Three major credit bureaus hold your FICO score; Equifax, TransUnion, and Experian, and each calculate it a little different than the others. Should you wish to dispute a mark on your credit report from one of the three bureaus you can write to them like I have done previously (see below for address information).

Equifax Information Services
P O BOX 740256
Atlanta, GA 30374
800-997-2493

TransUnion
Customer Disclosure Center
Trans Union Consumer Relations
PO Box 2000
Chester, PA 19022-2000
800-888-4213

Experian
NCAC
PO Box 9556
Allen TX 75013
888-397-3742

Your FICO score is used in determining your interest rate, and is even used as a barometer for getting a job. FICO scores range between 300 and 850. Ratings are as follows:

Excellent: Over 750
Very Good: 720 or more
Acceptable: 660 to 720
Uncertain: 620 to 660
Risky: less than 620

The formula used to calculate your FICO score includes information based on several factors:

~ 35% on your payment history
~ 30% on the amount you currently owe lenders
~ 15% on the length of your credit history
~ 10% on the number of new credit accounts you’ve opened or applied for (fewer is better)
~ 10% on the mix of credit accounts you have (mortgages, credit cards, installment loans, etc.)

Now that you know what your FICO score is and how it is calculated you’ll want to work on getting it as high as possible. I’ll be offering some tips in the coming weeks!

For more information about credit or to apply for a credit card (click here).

If your school participates in the Federal Family Education Loan Program (FFELP) they are not permitted to refuse to certify a loan because of the lender the borrower has selected.

The law and regulations clearly prohibit institutions from refusing to certify a loan based on the borrowers choice of lender. Section 432(m)(1)(B)(ii) of the Higher Education Act of 1965, as amended (HEA). The Department’s regulations at 34 CFR 682.603(e) further provide that the limited authority under which a financial aid administrator may refuse to certify a Stafford or PLUS loan does not include the borrower’s selection of a particular lender or guaranty agency.

Furthermore, a school’s failure to comply with these requirements may result in the Department of Education imposing a fine or taking other administrative actions.

So if your FAO refuses to certify your loan based on the lender just quote the Higher Education Act of 1965. That will send chills down their quivering spine!

If you’re looking for an estimate of what your Expected Family Contribution (EFC) will be and how much aid you or your student may be eligible for than the Department of Education has a great tool called FAFSA4caster.

FAFSA4caster determines what type of federal aid (grants, work study, and loans) the student may be eligible to receive and provides an estimated award for each.

It will probably take 15 minutes to complete and you will need the following things handy before you begin: Social Security number, W-2 forms, bank statements and business and mortgage information.

I found the tool most helpful.  (Click here) to check it out.

Did you know that not all schools are accredited to accept Federal student loans? Your school must be a Title IV Qualifying School.

I was actually under the belief, not so long ago, that all schools could accept Stafford loans, but I was wrong.

If you’re wondering if your school is a qualified Title IV school and to search for the federal school code – Click Here. The Department of Educations search tool is quick and easy to use. You’ll just need to know the schools name, the state , and the city the school is located in.

I have a question for you. Have you ever stopped to consider what fees are associated with your Stafford loan undergraduate application? If you have than you are in the minority. Most students generally have trouble just navigating the student loan process on the whole; fee’s become an afterthought.

The simple fact is many lenders charge fees ranging from 1-2%. Fee’s are about the only thing these days which delineate one lender from another. The interest rates are fixed and can not be negotiated, but fee’s can fluctuate.

Here at staffordloan.com we work with Discover Student Loans on undergraduate Stafford loans and are happy to inform you that we waive the fees for you! There are zero fees! The application process is quick and easy. Just make sure to complete your FAFSA first!

To apply now (click here).

I want to make sure you are all aware of the scholarship programs we are involved in.  For a partial list, please see below:

Student Loan Network will be holding a $10,000 scholarship drawing on October 31, 2008. There are no GPA or essay requirements, and the registration form is very quick, and easy. Make sure you’re registered at: StudentLoanNetwork.com/10K

Have you registered for Scholarship Points, our free college scholarship awards site? Scholarship Points gives away $1,000 scholarships each month along with other awards. For more details visit: ScholarshipPoints.com

StudentScholarshipSearch.com features over $9 billion worth of scholarships and grants for undergrad and graduate students. New listings are added everyday, so make sure you visit often.

Our most interesting opportunity to date: Scholarship Idol Video Contest – Submit a YouTube video for a chance to win $1,000 – but there are some rules so read the directions and Good Luck!

The Department of Education has published a draft (subject to changes) copy of the 2009-2010 FAFSA for public review. Lots of changes – this is a significantly different FAFSA than in previous years, with things like the worksheets completely gone. Here’s a comprehensive list of changes.

Summary of Changes 2009-2010 Free Application for Federal Student Aid (FAFSA)

Colors – The 2009-2010 FAFSA colors are green for student information and purple for parent information.

Year References – All year references have been incremented by one year.

Design – The design and layout of the FAFSA have changed. The application pages are numbered five through ten. The Notes pages are numbered one through three. The ‘What is the FAFSA?’ (Frequently asked questions) information is incorporated into the booklet as page four. As in previous years, a return envelope is included.

Worksheets incorporated into the application — The Worksheets page has been eliminated (page 5 of the 2008-2009 FAFSA) and the majority of the Worksheets data elements have been incorporated into the application (page 7 of the 2009-2010 FAFSA). The data elements are incorporated as follows:

Worksheet A – Deleted (See ‘Data Elements Deleted’ below)
Worksheet B – Becomes question 47 (student) and question 95 (parents)
Worksheet C – Becomes question 46 (student) and question 94 (parents)

Data Elements added – The most significant changes include the expansion of the dependency criteria (page 7) to designate individuals who were in foster care (question 55); emancipated minors (question 56) or minors in legal guardianship (question 57); and individuals that have been verified as an unaccompanied youth who are homeless children or youth or are at risk of homelessness (question 58-60) as independent students for FAFSA/Title IV, HEA program assistance purposes.

Other changes include:

Adding the TEACH Grant question to the paper FAFSA (question 32);
Reformatting the veterans education benefit questions to ask whether the applicant received benefits (question 44) and to indicate what type of benefits were received (question 45)
Adding a field to allow parents to provide an email address (question 71);
Adding ‘dislocated worker’ to the list of criteria that could qualify an applicant for the Simplified Needs Test and or Automatic Zero EFC (question 85);
Increasing the time period for measuring Federal means-tested benefits from 12 months to 24 months (Steps Four & Five of the FAFSA).

Data Elements deleted –

Two data elements have been deleted from question 47 (formerly Worksheet B). They are ‘Foreign income exclusion…” and “Credit for federal tax on special fuels…”.

Worksheet A is deleted, including the following four data elements:
Earned income credit from IRS Form 1040;
Additional child tax credit from IRS Form 1040;
Welfare benefits, including TANF;
Social Security benefits received, that were not taxed (such as SSI)

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